tv Bloomberg Markets European Open Bloomberg June 12, 2020 2:00am-4:00am EDT
from the bloomberg terminal. a 2 trillion dollar wipeout. u.s. equities see their worst rout in 12 weeks. is there more to come? the precipice of disaster. america's fourth-largest city but it may reimpose -- steven mnuchin says the country cannot close again. plus, european banks close to capital requirements. just under an hour away from the start of trading. futureske a look at after the big drop we saw. saw drops in asian stocks overnight. if you look at yesterday's cash
a drop in the dax . 559 points. 559 point drop. in terms of u.s. futures, we see a little bit of green on the screen. 1.5% gains in s&p and the dow. can news on the u.k. economy, let's get straight to that. the u.k. economy shrank by 20.4%. that is versus the previous month. dropstimate had been for a of 18.7 percent. 19% or so. it does show a stunning drop in output for the u.k. economy during specifically the month of
april. the u.k. went into lockdown around the month of march. we are getting some other numbers as well. industrial output falling 20.3% to more than the estimate penciled in. of the otherme details comingwç through, construction numbers, services. construction following 40%. we will get back to the u.k. economic story. conversationo that with david owen. market.t back to the we saw a lot of that.
, markets,ean stocks down by 5% in the session yesterday. will is a sense perhaps we pause. the focus does seem to be in a second wave and a host of other factors to see if they were at fault or to blame for this selling. was it about what the said -- the fed said about the economy? all of those talked about in the past 24 hours. >> a lot going on in markets. as the u.s. had its worst selloff since march. h1almost $2 trillion erased from equities. what drove that switch and sentiment?
risk off a classic day. >> we should not be surprised by a reprieve. we got statistics on infection rates that caused concern. >> the conversation has shifted to is there a second wave? >> what we heard from jay powell really changed the mood. >> it is charitable to sobering comments. >> jay powell put a dose of cold water on what is happening. intothink we got mold complacency in the virus. >> it could be a healthy thing the market drifts lower. >> i don't think it is that surprising we are taking a step back. i don't necessarily think this is a sign of panic. >> this is the reckoning a lot
of us are waiting for and we waited a long time. >> let's get into the markets now. our macro strategist. we will have to kick it off with the question of the day. was it a sign of more to come? >> it is a host of factors that can trip it it. speculation, the market is coming crashing down to economic reality. ultimately, there is not an obvious catalyst. too much, too soon. covid-19 doesn't warrant caution. it is looking like a spike. just the overstretched valuation ther a 45% bounce from
march lows leaves equities vulnerable. after recent bullish sentiment. blaming the fed, the signal they are not going to raise rates, billy was more of a fuel than a spark. if you look at european equities, those begin to sink lower. more of a healthy correction. a significant selloff going forward. asian markets taking this in stride? seem to be recouped. is there a sense of a second wave or perhaps a continuation of the first wave in the u.s.? become itstarts to
starts to become a u.s. story rather than they global one? >> i think that is the case. if we look at what is happening in europe, there are indications the recovery is starting to take shape. virus infections are taking higher. ultimately, they do remain contained. valuationis with the story in the u.s.. if we do see a flareup in u.s. infections and that does materialize, the search for yields and the improving does supporturope this rotation. potentially, asia is ahead of the curve as well. >> not really improving and the u.k.. i realize it is separate from europe.
20 point 4% drop in april gdp. is the u.k. worse off than anywhere else? aprilyou look at the numbers, that does capture the peak impact of the lockdown. down 100% for the month. i think going forward with lockdown measures being gradually lifted, we would effectively see some of this ease. going forward, crucially for the u.k., is how we escape from this lockdown. i think the u.k. is going to be more challenged. >> a lot of folks, thank you
you can see european futures are down. a horrible day yesterday. both in terms of european and u.k. index losses and then even worse in the u.s.. bloomberg first word news, here are the top stories. the u.k. planning to introduce soft border checks with e.u.. the measure is temporary, and effort to avoid hitting business already suffering. this comes as britain and the you step up the pace of negotiations. houston may be approaching the precipice of disaster, according to a senior local official. re-imposingclose to stay-at-home orders. the warnings highlight the
danger of a second wave of infections beyond the initial hotspot. the virus has killed 113,000 americans. the u.s. cannot shut the economy again, even if there is a second wave of infections. treasuryccording to secretary mnuchin. speaking on cnbc, he said shattering again could cause more damage but also said it will not be necessary. tracing arecontract improving. and officials have a better understanding how to contain an outbreak. >> let's talk about the global economy and the extent to which it is recovering or not. the imf says the global economy is recovering more slowly than expected. the chief economist said it will
bear lingering scars from the experience. given the need for reallocation of labor, way, theation in a big bankruptcies and solvency issues, and the prospect of changes in continued havey are, one has to be quite concerned about partial recovery. variables point to significant scarring effects. our conversation this hour. very good to have you with us. we are defined going to get to the u.k. data and the shrinkage of the u.k. economy. there is a lot going on in markets. we wanted to start with a bigger picture conversation. given the concerns around the
global economy and the selloff in risk assets, that raises questions about wealth effects. how you can put into context the big move we are seeing in markets and the slow pace of recovery for the global economy? we are not really following the markets. clear there will be setbacks in the way, even assuming economies need to reopen. and life slowly but surely returns to normal. to be very deep scarring. covid is going to come to a fundamental reappraisal of things going forward. many things will not go back to normal at all. to work its way through this.
,here will be some sectors companies that actually do well. we are seeing policy responses that are unprecedented. that will lead to repricing over time. the bigger picture is, the market is going to have a @ndifficulty working out wheree world is going to be. this is completely unprecedented. obviously, not following the minute by minute moves makes everyone's job a little easier. central bankers have learned you have to follow the markets broadly. has to watch liquidity in the u.s..
think theseyou central banks are concerned not about disastrous drops but blowing up bubbles? >> the important thing for the central banks, it is very obvious with the bank of england , they want the banking sectors to be part of the solution. unlike the great financial crisis, the banks are the epicenter of the crisis. were all these parallels with the great depression of the 1930's where money fell by 30%. sure, the banking sector in the financial crisis did not go down. there are credit lines being extended. u.s., the u.k., the eurozone.
kithank lending is increasing. it is currently growing over 7% per year. this is a major downturn. that is one thing banks are keen on. they continue supporting the economy. and then we have concerns from the bank of england. banking sectorw being part of the problem. these very crowded trades. central banks are looking at that. they are looking at the spreading to germany. at the end of the day, they cannot do everything. out howhave to work things will look in the future. >> thank you very much. david owen, chief european economist. out on how thea
we pulled back from some of those earlier losses. be down by 1.1%. temporarily doto light burger checks with the eu -- border checks. it is an attempt to soften the blow to businesses struggling with the coronavirus. this came as the u.k. economy shrunk by more than 20.4%. let's get back to david owen who is still with us. looking at your notes ahead of the conversation, do think it is possible we see some sort of extension to the brexit or post frexit trade conversations later? in theory, the end of this time is supposed to come this month and they're supposed to be a decision about an extension. you think that could come later in the year.
why so? >> according to the eu and brexit, anything can be fudged. there is a chance the government is going to offer an extension. again, making that clear. it can be fudged. there is something published recently. any of the constitutional lawyers working alongside are excepted. it can happen. the politics are interesting. taxes which are going to be most impacted by a hard frexit are those which unfortunately have been impacted pretty badly by covid. boris johnson his 80 seat majority. you have to think, this could all change.
people in those regions do not want a brexit. it will be interesting to see the reactions to this proposal. there will be a light touch. trade goes both ways. seeill be interesting to to trade, also the response go well. it is a negotiating tactic but is it going to fly? question two and -- >> i understand about some people not wanting a no deal brexit but how would it hit gdp? >> nothing like the hit from covid. it is brexit's life. discuss isld wish to
most of the discussion is about trading goods. u.k., and indeed for europe, the service sector which theso important, intellectual policy, research u.k.opment, financing, the once access to services. too much focus in the service sector, the u.k. excels at services. we need access to continue trading with the biggest market at our doorstep, the eu. >> ok. >> i think all these things are going to -- >> we really interesting. i learned all about mode five services and the export of those permit think you for joining us. herks for bringing us to and global growth. will join the cac 40, that
matt: welcome back to bloomberg markets, this is the european open. losses wey of huge are looking at futures here in europe that are still pointing down. u.s. futures a little higher this morning. french call center operator telegraph on its will replace -- rmance, call volumes are continuing to increase, expanding their essential services role. the index change will come into effect monday, june 22. addt of funds will have to
[indiscernible] the telecommunications power, computing power. these powers are converging 5together. aboutyour business is all customers, businesses need to interact with customers whether working from home or from the office. what difference has the work from home trend may? can you give us any numbers? we have been affected by the pandemic. inwe have an operation china, we saw what was going on. we rebalanced our operation from
brick-and-mortar to remote working. months, we have 80% of our people working at home. means a lot of logistics. [indiscernible] it has been very interesting. we were able to get the same kind of quality with work-at-home that we have traditionally with brick-and-mortar. matt: do youíñ think you will be likely the boosted
[indiscernible] life.not a job, it is a [indiscernible] it is going to give them more energy to succeed. we are extremely happy. the beginning of a new chapter of our lives. matt: thank you so much for joining us. daniel julien, chairman / ceo, teleperformance. it got a huge boost from the work from home changes we have seen. how long will they last? what we know for sure is
we are seeing futures point down again today for europe. if stocks fall today, they will have lost ground every day this week. you can see u.s. futures are actually pointing up after the on u.s. drop yesterday indexes. european futures are lower. the bread first word news, top stories -- bloomberg first word news, the global economy is recovering more slowly than expected. it will bear lingering scars from the pandemic, according to the international monetary fund. the imf released its latest growth projections that are likely to be worse than the 3% contraction it predicted in april. west texas crude is heading for its first weekly loss since late april on fears of a second wave of virus infections in the u.s.
could derail a fragile recovery. access supply. markets shrugged off a pledge by opec to extend their output cuts. the u.k. economy shrank a record 20% in april as businesses revealed under the coronavirus lockdown. the contraction follows a 6% drop in march. those figures, difficult week for the prime minister, under pressure to reopen the economy more quickly while facing criticism for his handling of the crisis. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. angela merkel has reached out to tona to allow marketr; access foreign companies. she spoke with the chinese premier yesterday to discuss an ambitious accord between the eu
and china. thursday marked the 500 million euro deal between the chinese partner making volkswagen the number two foreign carmaker in that nation. this comes days after president trump stunned germany by a plan to pull troops out of the country without any forewarning, and russia has been involved in this drama. let's talk through some of it with lars p. feld, professor, walter eucken institute, one of the so-called wisemen. thank you for joining us. let me ask you about this bridge to china. it looks as if the chancellor and the eu are building bridges to china, where the u.s. may be burning them. one of theis programs germany and the eu followed for quite some time. they wanted to have an investment agreement with china
for a longer time, and now tried to conclude it in difficult times due to the coronavirus pandemic. i do not think it is a reaction to the difficulties that have risen with the u.s. in recent times. where do you see the relationship between germany and china heading? lars: the problem with china has , they wantedcently to invest considerably into firms in european countries. the eu and germany have reacted with further restrictions on foreign investments from china, now they tried to have a reciprocity agreement in order to access the chinese markets more considerably. on the other side, also be able to remain open for chinese
investors. matt: where do you see the relationship between the germany and the u.s. headed? we have reports of president trump snubbing angela merkel as she is trying to step up to vladimir putin, and pulling troops out is not a good look at a time like that. i have the impression some people in germany feel to wait and see what the presidential elections will bring. i think the relationship with than.s. is going deeper only looking at heads of state. furtherthere will be cooperation between us. the u.s. is the most important market for german products. there will be a real conflict between the u.s. and germany or the u.s. and the european union.
for: is it still advisable angela merkel and germany to push for a pipeline between russia and germany? is it advisable to make sure putin and russia are paid tens of billions of dollars for their petroleum products, while trying to stand up to them -- and it has made the u.s. am happy? -- unhappy? lars: it is making the u.s. unhappy, but for energy support in germany and other parts of óeurope, the german government still wants to pursue this road. we want to speak to the contacts we have agreed upon, and we do not think we will back down just because the u.s. is unhappy about it. seen the european
government coming together to announce a rescue fund for the euro zone economy, and people are talking about this as the start to debt sharing. you do not like some of that. what it be possible to amend the package to make it fit more comfortably with you question mark what is it about it that you do not like? lars: i made clear that severing liability is a no go for us. austrianetherlands and it would&. hurt as well as germany. showed thislan should be 750 billion you take the eu proposal rescue fund which is allowing the eu to issue bonds in the market which
are guaranteed by the member state. that guarantee is different from trying to sever liability. i think it is a compromise. depends on the money to countries with the corona crisis. we cannot go on without any conditionality. is something southern european states are offering to the north. matt: we see a second wave, what looks like a second wave going through the u.s., and recently , red lights are going on in certain cities and states in germany. are you concerned about that possibility in europe? lars: we are concerned there will be a second wave of
infections, and what i learned from my colleagues in epidemiology and from probably --virologists, a second we will not be avoidable in the winter. the question is not whether we of avoid a second wave infections, but we are better prepared to cope with it to avoid a lockdown that we have currently seeing. when you think about the south korean strategy, it worked pretty well and they did not have to lockdown its economy as much as germany. in france, italy, spain, the lockdown was harder. we have talked about the pan-european response, what about the german fiscal response? are there elements of it that worry you in terms of the
government directing the economy to a larger degree, taking stakes in businesses, bailing out businesses, picking champions in certain sectors? i am/ concerned and am looking carefully what the government is doing, i can fully accept)w there is a huge fiscal stimulus needed in order to cope with this crisis, but it should not be used to conduct particular industrial policy while closing down to some extent the german economy to investors from abroad and investors from the china or u.s. this is something we have to be cautious about, that nothing like that happens. matt: what will we need in terms of stimulus when the second wave
hit? how do you expect that to affected the economy further? the goal is to avoid a lockdown during a second wave, and to have the health system cope with a second wave if it is coming. need a perhaps do not second or third package of fiscal stimulus. perhaps everything is working out fine, and we can have a v-shaped scenario of economic growth in germany. it is something we are trying to realize. when you look at the most recent figures, the report in april shows a big breakdown of the german economy, but when you look at figures from may, you see that take up of the german economy. it looks like we can realize the
v-shaped scenario, and then avoiding a second lockdown will be sufficient. thank you so much for joining us,
lars p. feld, professor, walter eucken institute. minutes away from the open of the european equity markets. up next, left anza shares were crushed yesterday. --lufthansa shares were crushed yesterday. ♪
futures, but european futures are still down. bloomberg business flash, top corporate stories from the bloomberg terminal. tz is asking a judge to take advantage of its stock by selling a billion dollars of new shares. bankrupt companies are wiped out, but hertz has seen a rally. investors are buying up travel companies on optimism the economy is poised for a rebound. a hearing is for today to consider that idea. grubhub and the cancellation of a five-year deal to deliver food from kfc and taco bell. grubhub declared it invalid. yum says the move will hurt customers who will pay more. the suit comes a day after takeaway agreed to buy grubhub for $3.7 billion. that is your business flash.
away from the open in equity trading, stocks that trade at a deep discount were punished in yesterday's selloff. value was one of the worst performing sectors from airlines to autos being crushed. what does that mean today? dani: that is right, and i do not mean to toot my own morning, but last week i talked about the fact that you had been performing well without much reason. it would seem at the last gasp of the rally, that came to fruition yesterday. in theas concentrated pain of yesterday selloff. what does that mean for today? people will look at these value shares and say, they do not deserve to be as punished as they did. .enault dropping 14% looking at the asian session, value is getting punished, european futures are down again today. it is likely we will see pain in
minute to go until the start of the cash equity trading on this friday morning. let's get to your headlines. a sentiment suddenly turned sour. is there more to come? brexit is a disaster. reimpose stay-at-home orders. steve mnuchin says that the country cannot close again. futures rise. eu agreed to sign off
on legislation to offset losses on government bonds. matt: we are seeing futures down here in europe. it is a little bit surprising. almost the same scale yesterday as the u.s. had them overnight. not quite as much. we are still seeing an indication of a very risk off though u.s. futures are opening higher. the ftse opening up down a quarter of a percent. you can see that they are still all down on the right-hand column. you see the ibex open down .5%. the europe stocks, the benchmark down about .3%. these losses are accelerating a little bit with the ftse down by more than 1%. about .8 or .9%.
this comes after big, big drops yesterday. was down yesterday almost 500 points. it was approaching 13,000 on friday of last week. now it is at 11,865. we have lost a heck of a lot. fears of a second wave of the coronavirus spurring some of those losses. also, jay powell's warning of lasting effects in the u.s. stock markets wiping out $2 trillion of value. joining us is an investment director. let's start off with our question of the day. do you think that the drop that we saw yesterdayt÷ and being extended in europe, is that a fo more toign
come? >> hi, good morning. we think that the market has rallied quite significantly since arch 23rd. the s&p has rallied over 40%. investors have a lot of optimism on the reopening of the economy. there is always concern about a potential for a second wave or whether the recovery of the economy is going to be precipitous. i think because of the news statesout that some u.s. are having spikes in cases, it is not surprising that some markets are having some correction. what we are confident is that we are probably not going to see the lows we were seeing in march.
we have the reopening of the economy. we will require stimulus. even though we may see a second wave, it was probably better managed than before. they probably will not stop the economy from running. there may be some corrections going forward because so much optimism is expected. envisiony, we do not another correction like we have seen before. anna: you say that maybe the worst is over. is it difficult to be overweight equities? you need to get overweight equities if that is the case? >> yes. the think the risk in outlook now is roughly balanced at the moment.
we see some positive moments where the economy is gradually reopening. place.s is in think the risk on balance is quite neutral. overall, we are at a bit of equity now between the u.s. and the emerging market of asia. et, we just spoke with of angela merkel's council of economic providers -- advisors. he told us that they expect a second wave in germany. risk in foriv you, a terms of investment strategy. do you believe that the stimulus
put in place so far and the rules that we have seen will help us to avoid a bigger drop in gdp? >> absolutely. i think the worst of the economic situation is probably past now. theg forward with reopening of the economy, there may be a second wave of infections. we cannot predict that. we think that the government will have better measures to cope with it. the trend is that people are now wearing face masks more often in public. that could be better at stopping the spread of the disease, unlike previously. also, there are positive developments on the medical side as far as vaccines being developed. there is progress going on.
i think that the worst is over. with the stimulus in place. reallyhat is going to be interesting to see the extent to which governments deal with this differently. persistent second wave taking place, how governments manage to deal with that, rather than the rather blunt instrument of putting the economy in lockdown. is the rally in gold over? >> we still like gold. really rallieds a safe haven. as we see news coming through with the risk being reduced, it may be harder for gold to get upside in the near-term.
we do continue to like gold. we think that gold will continue to have a place in our client's portfolio. the low interest rate environment that we are going to be in. low innd yields being so some areas, we think that gold is better than traditional safe havens. janet, you are going to stick with us. we have more with the bruin dauphin investment director on what to expect. going forward, is visibility clearing up? how to invest as well. we have some headlines in terms of the rare -- very hot airline sector. easyjet as well as british airways launched legal action against the u.k. government. we are fortunate enough to have
back to the final european trading day of the week. bear in mind, the heavy losses of yesterday and the u.s. and europe. futures are down by 1%. let's talk about what is going on in the u.k. the u.k. intense do a temporary light border check with the eu next year. businesses are already struggling with the impact of the coronavirus. in economy shrunk by 20.4% april. that, we know very well parts are not measures of the u.k. economy. they are more global. what do you think of the u.k.
assets because of the understandably dramatic week in april? i mean, the u.k. economy probably has the worst gdp. markets in be equity the u.k., preferring weak economic growth. we think is that the u.k. stock market generally, they are a value trade. they are more heavily weighted in banks and commodities, which are more difficult to perform and in the environment technology prices. generally speaking, we think that u.k. is talking about equity access. it is less attractive than their counterparts in the u.s. bonds, wef government
think they are sold low at the moment. we do not see much downside the moment. ofthink that the risk-reward pulling government bonds is just not good enough. and on the property sector, we have actually turned a bit more negative on u.k. commercial property. covid-19. after sectors isthe office going to be more uncertainty going forward. you were saying that you prefer the u.s. to the u.k. right now. when does the political situation become more important for investors to pay attention to? november is not that far away already.
absolutely. we think that the u.s.-china tension will remain. thes fragile actually after covid-19. we think that it is very unlikely to have the extent of political tensions flare up, like at the peak of the trade war before we got the stage on. trade deal. it is more important for the president to sort out the economy at the moment. i think really, unless trump's approval rating slides to an extent where he has to throw in the towel and he thinks that the political risk is going to emerge after the u.s. election rather than before. anna: interesting. our colleague with an
theresting piece on where election expectations might be working their way into the stock market. dani will be continuing her conversation with us on bloomberg radio. european banks are close to getting relief on capital requirements after the eu agreed to sign off on legislation to mitigate losses on government bond holdings. that conversation next. this is bloomberg. ♪
welcome back to the european market open. rings are moving pretty fast on the open. futures pointing higher by 1.6%. that seems to be turning around european equities. we started off in negative territory. now we are back in two the green. gains coming in across the european market. action against the european government's quarantine rules against arrival. march policy limited
passengers from high risk countries. we spoke to the coo of the u.s. as cost airline jetblue joanna spoke to us exclusively on what it would take to get passengers back. >> what we have learned is that the only thing certain is that there is use the things unfolding in the media today. we focus has been on how do build customer confidence in flying again. we have seen small glimmers of hope in the leisure sector. we think that domestic traffic will come back sooner than international. the business is ultimately going to involve -- evolve, or are some key dates coming up. the restrictions that it brings
start to expire. you will then have the freedom to start to change this airline to fit the new reality. what is jetblue going to look like in that environment? joanna: we have been very lucky to be the recipient of payroll lacked dollars. it covers about 76% of our payroll. at what the shape of jetblue will look like. we will obviously be a smaller airline. it is so difficult to project that far out. every week, we learn more about the impact of the coronavirus. we are looking at june and july for what the coming months are going to look like. >> in terms of what that coming demand will look like, you say that the leisure market is where the primary carrier is. is it people going to see friends and family at the moment, or is it genuine leisure
travel? joanna: it is a combination of the things. we are seeing pent up demand. we are seeing customers go back and see their family and friends. we have seen that in prior issues. there is a segment of people going to see their friends and relatives. it tends to come back earlier than the business sector. >> in terms of the concerns that the passengers have, what are you seeing at the moment? what concerns are you getting from the passengers you are taking on at the moment? what feedback are you getting? closelye measuring very what is important it for customers to rebuild their confidence and travel again. among the top are the cleanliness of the aircraft. social distancing and physical distancing. this will revolve around the things that our customers are telling us.
that will make it confident for them to travel again. they want crewmembers to be healthy when we are serving them. reduced service touch points. we are no longer providing some of our higher touch service. >> what are your staff telling you? joanna: our staff is very focused on the success of jetblue. everybody is focused on trying to ensure we are doing everything we can so that customers start feeling comfortable flying again. whether that is how we serve them, or cleaning products, or policies or procedures we have in place. our customers are very dedicated to jetblue. everybody is growing in the same direction so that jetblue weathers this storm. networko you think the will change as result of covid-19? within the united states, you are largely, as you say, a
domestically focus carrier. how does the network change? how does your offering change? how are you going to reconfigure? as you mentioned, we are a largely domestic carrier. 70% in the domestic market. 80% of the customers that we carry our leisure. we will be set up for recovery sooner than some other airlines. we think that domestic will return it quicker. we think that short-haul international will return it quicker than long-haul. long-haul is a patchwork of different openings. from jetblue's perspective, as customer start getting confident traveling again, we are well-positioned to take advantage of that. that was the jetblue airways president and coo speaking with our own guy johnson.
european banks are close to getting relief on capital requirements. that is after the eu agreed to sign off on legislation that would offset the significant losses on government bonds. for ackage is on course final agreement within days. is our us now on this european economy reporter alex. alex, what is this change all about? break it down for us. reporter: this helps banks deal with volatility in the bond markets specifically. a few weeks ago, italian bonds fell pretty sharply. normally, that means that banks take a hit to their capital ratios. temporarily, they do not have to take this hit and it lets them keep credit flowing to the real
economy. how does this tie in with everything else that they are doing to help regulators. to make banks up be part of the solution and not be part of any problem? exactly, after the last financial crisis, reporters have tightened the rules significantly. now the concern is that this would keep banks from loaning to small and medium-sized companies because that is what happened in the last financial crisis. regulators are quickly trying to get rid of restraint like temporarily reducing the requirements. l of this is really meant to
the solutionrt of and make sure they do not become a bottleneck. like slightly, the rules that we saw imposed after the financial crisis are now being loosened. is that the case? alex: you can get that impression. there are some expiration dates set into these rules. we will go back to normal. so if the economy does not recover as quickly as regulators are hoping at the moment. we will see. matt: we will have you back on when we find out as well. alex weber, our european economy record -- reporter joining us out of brussels. up next, a $2 trillion wipeout. u.s. equities sees its deepest
to theelcome back europeanwó market open. it started in negative territory, but clawed its way back. right now. up a touch. the cac in paris doing well .4%. stocks,those value travel and leisure and oil stocks that were weak in the u.s. yesterday. what have we got in europe? auto parts, real estate, and
banks on the upside. telecom andide, health care. we have a breakdown when we look at the stoxx 600. even though the overall numbers are fairly muted. todayán froming flat to positive on friday morning. matt: yeah, absolutely. we were on pace for a whole weak of losses in europe. these are the top stories from the terminal. the u.s. cannot shut down the economy again, even if there is a second wave. that is according to treasury secretary steve mnuchin. he said that shuttering again could just cause more damage. he also says it will not be necessary. testing and contact tracing are improving and officials have a
better understanding of how to contain an outbreak. the u.k. economy shrunk a record 20% in april. the contraction follows a near 6% drop in march. those figures come in a difficult week for the prime minister. he has been under pressure to open the economy more quickly while facing criticism for his handling of the crisis. haveet and british airways launched legal action against britain's quarantine rules. saying that the international arrivals have to isolate for two weeks. the airlines think it will further damag,j an already struggling international travel industry. on air and on quicktake powered by bloomberg powered by journalists in more than 120 countries. anna? in europe, markets
as we just highlighted, mostly in the green. that is after yesterday's cell wiped out the value of u.s. stocks. said, it was long overdue. the question is, was this a temporary blip or a sign of more to come? let's put that to our colleague who joins us. the currency and rate strategist. looking at assets as a whole, you must be mindful. >> good morning. what it means to me is that there will be more and more way.ility coming our if you look at it, thursday's meltdown was a train wreck waiting to happen. yesterday's selloff,
the combined earnings on the s&p 500 was $125. is that insane? of course it is. choice butrs have no to buy stocks at insane levels. you put it all together, what is the picture that you see? that is high volatility, not just once, but over and over and over again. anna, matt? heard morewe concerns about a second wave, first out of the u.s. he said germany is expecting a second wave, but he is hoping not to have to lock down again. he is hoping not to have to get more stimulus. that governments
are better prepared to deal with a second wave. is it possible that investors are too concerned about a second wave? ven: there is reason to be concerned about a second wave. what it means for travel and leisure, but it means for the hospitality industries, the economy is going to bear the brunt of all of this impact. they are probably thinking that we cannot get the economy to shut down every two months forever. maybe the virus is less potent this time around. on one hand, the policymakers are drafting with hope. they have to confirm the reality of earnings. that is why we are getting this dichotomy. matt, anna? anna: do not say the word forever. that is the worrying sort.
we saw that yesterday as well as risk assets sold. where are we expecting this next? >> i think what has happened in the markets is a good thing. the marketsthat have attached to the dollar has actually shrunk in recent weeks. that is actually a good thing. purchases ofuded treasuries and just about everything in between. ofing a very different kind conversation about the dollar. all that means is that the dollar will locally stay potent for now. anna, matt? matt: thanks for joining us. ven ram, currency and rate
to "bloombergback markets." this is the european open. we have seen a lot of volatility this morning. we saw massive routes yesterday. big point losses in europe. drops in u.s. equity indexes. now we are seeing a continuation of those drops in europe. if you look at u.s. futures, you see gains there. action ineturned to empty stadiums. the spanish league is the second to return to action.
the french league is the only one of the big five that called off competition. the league president told bloomberg that the french government's decision was a mistake. >> the date when the prime minister of france said to mark -- parliament that he would suspend the competitions, we said that we thought this was a big error. they were anticipating things at that time. nobody knew what would happen. they could not venture to think what would be done. we have demonstrated that the european competitions could go back. we did not know if it was for health reasons or other internal pressure that has not been talked about. :we calculated that the damages for this season, that is the thing we are worried about, if we did not stop the competition, the tv rights. and the loss in ticketing
income, it would be one billion euros of losses. but if we restarted the competitions without the sale of tickets, we are talking about 400 million. >> what was the cost benefit that you looked at? >> regarding financing, we would do it at different times. financing spanish football. we have a very healthy financial structure. we have got control of the spanish clubs. that is important. financial that the market has been financing football. they have access to other spanish banks that offered financing. that spanisht say -- has actually
needed to go and finance. the are very aware that deficit has to be financed, not just by getting loans. they will also have to reduce their expenses. they will have to get financial control to help them. in general, i think that we're big problem have a with finance in spanish football. anna: that was the la liga president speaking through a translator. return of the premier league in the u.k. let's speak to the ceo of a football club. currently stand 16th. their first game back is at home against the arsenal saturday. great to see you.
given what we have seen by the , would you have preferred actually if this season had been canceled entirely given the relegation risk? >> no. there is a risk of relegation every year if you are a club in the lower half of the table. we are a smaller club that is building our brand at the top level. we have that risk every season. we are very keen to finish the season. we are looking forward to playing again in about seven days time. how do you think the fans have taken this, paul, and how do you think their loyalty has evolved? all sports fans the world over, the most enjoyable part of the experience is being in the stadium. tv viewers is very important to
all of our sports at the top of all. having that great atmosphere in makes the tvs what production as well. they will be disappointed they cannot come -- for the past three makes the tv production as well. months. you think it makes a difference that a lot of these games will be shown free to air? is there an opportunity and that somewhere? so, because we are generating opportunities for new fans to come and watch our sport. we have a huge domination of live sport in our country. peopleas been a lot of footballt tune into over the next few months or so.
they might see games that they ordinarily would not get to see. we worked very hard on all of the safety aspects of returning to play. coaches,players, the all the way through to the executives, we are looking forward to getting on with the season and playing the next nine games as safe as we can. you quantify the financial damage that has been done to your club, the league, and what kind of recovery can you expect? you run into hundreds of millions of pounds. we were projected to lose a significant amount of money this year. that cost will be increased about 50%. that is with all of the work that the premier league is done to protect our revenues as much as we can. we have five games to go. to generate around
seven figures in each of those home games. that is a significant amount of able to will not be recover with fans in the stadium buying food and drink. if we go into next season without fans in the stadium, those losses increase further. we hope that we do not get a second wave of the virus. can we slowly, but surely bring fans back into the stadium and reduce those losses. understand the smaller clubs in the premier league, it is the attendance revenues that matter. is it a real priority for you to get fans back? do you have any visibility as to when or how that could be possible? paul: the premier clubs are
largely dominated by tv revenues. the stadium is important for a few things. broadcasters want those stadiums to be full. the premier wonderful record of playing their games in front of full stadiums every week, each generates a great atmosphere and a great tv product that helps us sell that product around the world. fans make the game. that specialre and attraction that we have for football in this country is not the same without the fans. when they do come to the stadium, they are also spending a lot of money on tickets and hospitality and food and drink and those sorts of things. it is important to get fans back in the stadium. we would like to see it happen as soon it is possibly safe to do so, even if that means starting with a small amount of
fans in the stadium, socially distancing so we can manage that process. then bringing more fans in the stadium over the course of the season. ideally, we would like to start with some fans in the stadium. most importantly, when it is safe or if it is safe for people to do that. look through ai private equity news headlines, i see a lot about football in there. looking at deals across europe. bain capital is looking at italian possibilities. in privatea pickup equity interest. a lot of these clubs are in difficult financial situations. are the vultures circling, so to speak. paul: they will be taking
advantage of a vulnerable situation. clubs will be open to those kinds of investment. football is the number one sport in the world. it will always be attractive to investors. the game is an obsession for most people in most countries. in our industry, in these difficult times, even in recession, it is attractive to investors. i do not think that has changed. anna: thanks very much. we will see what difference it makes in the national news. ceo.barber, club thank you for joining us. coming up, nike takes a knee. eenth a paide junet holiday. this is bloomberg. ♪
marks the end of slavery in the united states. it is the latest move from big companies to address racism following the killing of george floyd. us ons the latest for corporate response. what other kinds of corporate response have we seen? reporter: i think that corporations are realizing that they cannot sit back and be silent when consumers are protesting. they actually want to see them make change and commitment to the black community. one designer started an initiative where she is calling on brands like whole foods and target to pledge 15% of their purchasing power to black-owned is this is. also wants to see more companies taking action. it is not just retailers doing this.
have takeno, they action, pulling shows. resigned aftereo a controversial tweet. matt: jen, there has been calls for police reform for a long time. now calls to defund the police. john oliver dedicated his entire show to it. what is the story there? what kind of progress are you seeing? jennifer: i think that defund the police is something we will be talking about well into the november election. it is important to remember that activists for the most part do not want police departments to go away. they want funds to be redirected into the black community to help these communities out. minneapolis, new york city, houston, they banned chokeholds.
ocksaw louisville ban no-kn warrants. we are seeing republicans and democrats put forth legislation on police reform. it is something that we are going to be discussing and it is >rgoing to be something that protesters continue to ask about going forward. matt: all right. jennifer, think you so much for joining us. reporter from new york. that is it for the european open. stay with bloomberg television. there is a lot going on today as the equity index is down. blipesterday's big route a or was it something more long-term? we have some great guests coming up. hamed is coming up. i know we will hear from ed hyman.
♪ francine: seeing red, blustery as it were stay in months, s&p plunging. fears of a second rate -- wave, a new lockdown, and current devices -- coronavirus case is getting out of hand. steven mnuchin says they cannot shut the economy down again. a difficult week for the prime minister amid mounting criticism over his handling of the crisis. good morning and welcome
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